The Ultimate Tax Season Checklist: How to Get Prepared and Stay Ahead

Tax filing season can be a daunting time for many people. From gathering the necessary documents to navigating through complex tax laws, it's easy to feel overwhelmed. But fear not! With this tax season guide, you can get prepared and stay ahead of the game. This guide will walk you through the essential steps to ensure a smooth and successful tax filing process. From organising your financial records to maximising deductions and credits, we've got you covered. Our expert tips and strategies will help you save time, minimise stress, and potentially maximise your tax refund. Whether you're a seasoned taxpayer or a first-time filer, this checklist will provide you with the knowledge and tools you need to conquer tax season like a pro. So, get ready to take control of your taxes and put your financial affairs in order. Let's dive in and make this tax season your best one yet!

Key dates. Staying Ahead of Tax Deadlines

Tax filing season will start on the 15th of July 2024 and the tax filing deadline will be on the 21st of October 2024. Provisional taxpayers will have to submit their returns before the 20th of January 2025.

The Importance of Being Prepared for Tax Season

Being prepared for tax season is crucial for a stress-free experience. The first step is to gather all the necessary tax documents:

• IRP5 or IT3(a) certificates. You should get these from your employer, and they should be pre-populated on your IT12 income tax return. You will also receive these certificates if you receive annuity income;
• IT3(b) and IT3(c) certificates for all bank and investment accounts;
• Medical aid contribution certificate. Request this certificate from your medical aid. Remember that a hospital plan will not qualify for the medical aid rebates. Keep copies of all of the medical expenses that you did not claim from the medical aid. 
• Retirement Annuity Fund contribution certificates. Contact your financial advisor for these certificates. If you are lucky, they will be pre-populated on your tax return.
• Logbook for business travel. Ensure that you complete all of the details required by SARS. Click here to get a copy of our SARS-compliant logbook template. Make sure to have the purchase/lease contract for your vehicle handy as SARS may request it if you are selected for an audit or verification.
• Section 18A certificates for all qualifying, deductible donations. You will not be able to claim the tax deduction for donations if you don't have the S18A certificates on hand.
• Supporting documents for all other sources of income or possible deductions. This may include rental property income, commission income and business income to mention a few. Click here for a template of an income statement that you can use. Ensure that you have the necessary supporting documents on hand if you are selected for an audit or verification.
• Provisional taxpayers with business interests have to complete a statement of assets and liabilities every year. Click here for a template of a statement of assets and liabilities that you can use to summarise your assets and liabilities. It is very important that the assets and liabilities are declared accurately as SARS will use these balances to ascertain whether you may have under-declared income.
• If you’ve installed new, unused solar PV panels with a generation capacity of at least 275W between March 2023 and February 2024, you could claim a rebate of 25% of the cost, up to R15,000. Remember to keep your VAT invoice, proof of payment, and Certificate of Compliance handy.

Organising your financial documents is a key aspect of being prepared. Create a system to keep all your paperwork organised, whether it's using physical folders or digital storage solutions. This will make it easier to locate specific documents and ensure that nothing gets overlooked. Consider categorizing your documents into sections such as income, expenses, and deductions, to streamline the filing process.

Understanding tax deductions and credits is also essential for being prepared. Deductions and credits can significantly impact your tax liability and the potential refund. Take the time to research and familiarise yourself with the deductions and credits available to you. This knowledge will allow you to maximise your tax savings and ensure that you're not missing out on any potential benefits.

Organising Your Financial Documents

When it comes to tax season, organisation is key. By having your financial documents well-organised, you can save time and reduce stress during the filing process. Start by creating a system for keeping track of your documents. Whether you prefer physical folders or digital storage solutions, make sure it's a system that works for you.

One way to organise your financial documents is to categorise them by income, expenses, and deductions. Within each category, further, divide your documents into subcategories. For example, under expenses, you might have sections for medical expenses, business expenses, and charitable contributions. By organising your documents in this way, you'll be able to quickly locate the information you need when it's time to file your taxes.

Consider using technology to your advantage when organising your financial documents. There are numerous apps and software available that can help you keep track of receipts, expenses, and other important documents. These tools can make it easier to digitise your paperwork and store it securely in the cloud. Not only does this reduce the chances of losing important documents, but it also makes it easier to access and share them when needed.

Remember to keep your financial records for at least five years. SARS generally has five years from the filing date to audit your return, so it's important to retain all supporting documents during this period. By keeping your records organised and easily accessible, you'll be well-prepared if you ever need to respond to an SARS inquiry.

Tips for Maximising Your Deductions

Maximising your deductions is an effective way to reduce your taxable income and potentially increase your tax refund. Here are some tips to help you make the most of your deductions:

1. Keep Track of Business Expenses

If you're self-employed or have a side business, it's important to keep detailed records of your business expenses. This includes receipts for office supplies, equipment, travel expenses, and any other costs directly related to your business. By accurately documenting your expenses, you can claim them as deductions and lower your taxable income.

2. Contribute to Retirement Accounts

Contributing to retirement annuity fund, not only helps secure your financial future but also offers tax benefits. A portion of your contributions may be tax-deductible. Take advantage of available retirement annuity fund options and contribute as much as you can comfortably afford.

3. Maximise Charitable Contributions

Donating to charitable organisations not only supports causes you believe in but can also result in tax savings. Keep track of your charitable contributions throughout the year and ensure you have proper documentation, such as receipts or acknowledgement letters, to support your deductions. Be aware of the SARS guidelines regarding eligible charitable organisations and the documentation requirements for different donation amounts.

4. Contribute to a Medical Aid

Medical aid contributions and other qualifying medical expenses are used to calculate your medical tax rebates, and can have a significant impact on your tax liability.

5. Review and Plan for Tax Law Changes

Tax laws are subject to change, and staying informed can help you adapt your tax strategies accordingly. Regularly review any updates or changes to the Income Tax Act, and consult with a tax professional if necessary. By staying proactive and informed, you can take advantage of new deductions or credits and ensure compliance with any new regulations.

Hiring a Tax Practitioner vs. DIY

Deciding between hiring a tax practitioner or doing your taxes yourself is a common dilemma during tax season. Both options have their advantages and drawbacks, so it's important to consider your individual circumstances and preferences. Here are some factors to consider when making this decision:

1. Complexity of Your Tax Situation

If your tax situation is relatively straightforward, such as having a single source of income and minimal deductions, you may feel confident in handling your taxes yourself.  However, if you have a complex tax situation, such as self-employment income, rental properties, or investment income, hiring a tax professional may be beneficial. They can navigate the complexities and ensure that you're maximising your deductions while staying compliant with tax laws.

2. Time and Convenience

Filing your taxes yourself can be time-consuming, especially if you have a busy schedule or find the process overwhelming. Hiring a tax professional allows you to delegate the task, freeing up your time and reducing stress. Additionally, tax professionals stay up to date with the latest tax laws and regulations, saving you the time and effort of researching and understanding complex tax codes.

3. Potential for Savings

While hiring a tax professional comes with a cost, they can often identify deductions and credits that you may have overlooked. Their expertise can potentially result in higher tax savings or a larger refund, offsetting the cost of their services. If you have a complex tax situation or anticipate significant changes in your financial circumstances, it may be worthwhile to consult a tax professional.

4. Peace of Mind

Tax laws can be complex and subject to change. If you're unsure about your ability to accurately navigate through the filing process or have concerns about potential audits, hiring a tax professional can provide peace of mind. They can handle the complexities on your behalf and represent you in case of any SARS inquiries or audits.

Ultimately, the decision between hiring a tax professional or doing your taxes yourself depends on your comfort level, time availability, and the complexity of your tax situation. Consider your individual needs and consult with a tax professional if you're unsure about the best course of action.

Common Tax Mistakes to Avoid

When filing your taxes, it's essential to be aware of common mistakes that can result in penalties or delays in processing. By avoiding these pitfalls, you can ensure a smooth and error-free tax filing process. Here are some common tax mistakes to watch out for:

1. Inaccurate information

Ensure that you complete your tax return accurately. Mistakes on your tax return could lead to significant penalties.

2. Not tracking your business travel expenditure

Keep accurate records of all your business and private travel expenses, and complete an accurate logbook.

3. Omitting Income

It's important to report all income earned during the tax year. SARS receives copies of documents like your IRP5, and IT3 certificates, and any discrepancies can trigger an audit. Keep track of all your income sources and report them accurately on your tax return.

4. Not Keeping Copies of Supporting Documents

Always keep copies of any supporting documents. Keeping copies ensures that you have a record of your supporting documents and can easily access the information if needed in the future.

Tax payments. When should you settle your outstanding tax liability?

If you are in the auto-assessment population, you will have to pay your outstanding tax liability within 30 days after the end of the tax filing season. If you are not part of the auto-assessment population, payment has to be made within 30 days of receiving your tax assessment (IT34).

Auto-Assessments

SARS will issue auto assessments to taxpayers whose tax affairs aren't too complicated. If you are satisfied with the auto-assessment, you don't have to do anything. If there are certain items on your tax return that you don't agree with, you can query and correct these items via SARS e-Filing.

Conclusion

In conclusion, as we approach the tax season, it is essential to start preparing early to ensure a smooth and stress-free process. By implementing the strategies and tips discussed in this blog, you can avoid a lot of unnecessary stress. Remember to gather all the necessary documentation, stay organised, and consider seeking professional assistance from an accounting firm to navigate any complex tax situations. With proper planning and attention to detail, you can confidently face the upcoming tax season, knowing that you have taken the necessary steps to optimize your financial situation. 

Feel free to make an appointment to discuss your income tax matters by clicking here

JM Bennett is a Chartered Accountant (SA), a Registered Auditor and a Registered Tax practitioner. He obtained an MBA from Wits Business School in 2020 and a Higher Diploma in Tax from the International Institute of Tax and Finance in 2016. He has almost 20 years of experience in accounting, auditing and tax of SMEs.